Wednesday, April 12, 2006

The Economist article that I linked last week is, for the most part, a balanced discussion of the “new paternalism” that hints at what I consider the correct position. The new paternalists’ proposals are fairly stated and argued, with the opponents’ positions (including mine) represented as well.

But I have one major complaint: the article allows Sunstein and Thaler to continue playing fast and loose with rhetoric, in a manner that substantially muddies the water. S&T use the oxymoronic term “libertarian paternalism,” and the article goes along with them. Dan Klein has written at length about the disingenousness of S&T’s linguistic ploy. As Klein says, libertarianism is a political ideology whose central organizing principle is the distinction between coercive and non-coercive action. Yet S&T refer to such “libertarian paternalist” policies as cafeterias making their desserts difficult to find and employers automatically signing their employees up for the savings plans. Of course, libertarianism takes no position on such arrangements, except that they should be allowed as voluntary arrangements between individuals, as should alternative arrangements. If you want to patronize a restaurant that hides the desserts or take a job that offers a restrictive benefits package, that’s your business.

S&T might reply, “Yes, that’s what makes our proposals libertarian: they are consistent with non-coercion.” But then why mention libertarianism at all? We could just as well talk about “libertarian movie ticketing” (the theater can stop you from bringing your own popcorn!) or “libertarian dress codes” (stores can make service contingent on your wearing shirt and shoes!). S&T’s only purpose in mentioning the word “libertarian” is to associate it with the term “paternalism.”

The word paternalism has different but related meanings. To most people, its meaning is political – it refers to government policies that restrict individuals’ choices for their own (alleged) good. But it can also, sometimes, refer to non-government policies that do the same thing, such as the rules of a family or workplace. By juxtaposing the term “paternalism” with the unquestionably political word “libertarian,” S&T invite us to think of its political meaning, and then they proceed to talk about non-political issues like private savings plan rules. They suggest, but use the passive voice to avoid actually saying, that employers might be required to adopt their plans (which would be coercive and non-libertarian). Sadly, the Economist employs (or falls prey to) this sly rhetorical move: “One example of soft paternalism has already attracted the interest of governments and the backing of this newspaper: employees should be signed up [note the passive construction – GW] for company pension schemes by default. … Under [Thaler and Benartzi’s Save More Tomorrow] scheme, a fraction of workers’ future pay increases is diverted [passive voice again – GW] into their pension pot before arriving in their pay pocket.” So… will employers be forced to adopt such plans? No answer.

And then, like the paternalists whose theories it is reporting, The Economist proceeds to talk about even more clearly coercive policies such as sin taxes designed to reduce consumption of cigarettes or fatty foods. The paternalists’ rhetorical purpose here is to get us to think of paternalism as all one thing, a nice continuous spectrum from policies that restrict choice slightly to those that restrict choice substantially. As they slide along this spectrum, they fail (I think deliberately) to draw attention to when they’ve crossed the line from libertarian (non-coercive) to unlibertarian (coercive). As Klein puts it, “I believe they seek to dispose of libertarianism by speaking in a way that upsets libertarianism’s key semantics, but without making clear that that is what they are doing, much less challenging those semantics directly.”

If paternalism can be coercive (as with a sin tax) or non-coercive (as with an employers pension plan rules), it is crucial to distinguish between these two types; acceptance of one form of paternalism does not imply acceptance of the other. Lest it seem I’m drawing a distinction without a difference, we should note that private non-coercive paternalism can be avoided much more easily than the public coercive variety. You can choose whether to take a job with a restrictive benefits package; you cannot choose whether to contribute to Social Security. You can choose whether to join AA or Weight Watchers; you cannot opt out of a sin tax.

3 comments:

That's a problem with all political labels. They are always twisted by everyone but their proponents. Two groups are responsible for this:

First people who have different ideologies which are compatible yet less popular than said label try to exploit the popularity of the other by making themselves look like they are from the more popular school of thought. Second the opponents use this fact to make the label seem similar to the less popular ideology.

For example, white supremacist like to call themselves conservatives which allows liberals to say that conservatives are racists.

Socialists like to wave the liberal flag then conservatives can point the finger at liberals and call them socialists/communists.

Yet I think most conservatives and liberals see themselves as in the standard dictionary definitions:

con•ser•va•tism n.1. The inclination, especially in politics, to maintain the existing or traditional order.2. A political philosophy or attitude emphasizing respect for traditional institutions, distrust of government activism, and opposition to sudden change in the established order.

lib•er•aladj.1. a. Not limited to or by established, traditional, orthodox, or authoritarian attitudes, views, or dogmas; free from bigotry.b. Favoring proposals for reform, open to new ideas for progress, and tolerant of the ideas and behavior of others; broad-minded.c. Of, relating to, or characteristic of liberalism.

lib•er•al•ism n.1. The state or quality of being liberal.2. a. A political theory founded on the natural goodness of humans and the autonomy of the individual and favoring civil and political liberties, government by law with the consent of the governed, and protection from arbitrary authority.b. often Liberalism The tenets or policies of a Liberal party.

Glen, I think that there are actually two distinctions here that you and Klein are conflating. One is coercive vs. non-coercive, and the other is government vs. non-government. S&T are not using your definition of paternalism. To them, an act of paternalism is something like "when a group of people believe that they know what is good for others, and create policies in an effort to bring that about." That group could be in the public sector or the private. They could try to benefit others in a coercive way (such as by restricting individuals' choices) or in a non-coercive way (such as by changing the default option or describing the options in a way that makes more people choose one over the others). The Save More Tomorrow plan is an example of non-coercive paternalism by an employer. It increases employee savings, not by forcing people to save, but by structuring people's options in a way that makes high-savings choices attractive to people (as by letting employees make plans to dedicate portions of future raises to savings which will go into effect unless they choose to reverse them). If the employer instead required all of its employees to put some of their earnings in a savings plan, then that would be coercive paternalism by a private employer. Government paternalism can similarly be coercive or non-coercive.

Coercive paternalism is generally less burdensome if it is done by an agent in the private sector (like an employer), since exit is easier and there are generally more substitutes available, but S&T are counting both kinds of policies as coercive (since exit is the only way to avoid them) and paternalism (since they are intended for the benefit of the individuals who they manipulate). S&T are allowing "libertarian paternalism" to cross betwen government and non-government policies, as long as they are non-coercive and for the benefit of the manipulated. Presumably, their reason for this is that non-government examples are more plentiful and easier to understand (at least for most people).

One tricky issue is that coerciveness varies in degree, and almost all government policies involve at least some sort of coercion on some level. If the government is controlling how a choice is being structured or described, then either the government is offering the options (in which case there is probably at least some taxation required in order to offer these options) or some other actors are offering the options (in which case the government is restricting how other people can describe the options that they offer). A strict libertarian could object to either of these, but they're within the range of what most people accept as not-particularly-coercive. Even if it is not strict libertarian paternalism, at least the libertarian paternalist spirit is still available to encourage the government to leave as many options open as possible while arranging things so that many individuals make choices that the government believes to be for their own good.

You're right that coercive v. non-coercive and gov't v. non-gov't are two different distinctions, but they are very often the same, and they are the same in this case. Look up coercive, and you'll find that all the definitions refer to physical force or irresistible pressure. That's simply not the case for the dessert policies of restaurants or the benefits packages of employers. You can eat at other restaurants, and you can take other jobs. Your deals with restaurants and employers are voluntary arrangements. On the other hand, state mandates are enforced by coercion. If the state requires an employer to offer certain rules for savings plans, or requires a restaurant to increase the price of desserts, any employer who refuses will be subject to punishment by the state.

The Save More Tomorrow plan is, if chosen voluntarily by employers, non-coercive paternalism (I conceded in the post that paternalism does have both political and non-political meanings). But if the employers are forced to offer that plan, that's coercion.

I suppose you could say, "If you don't like the government's policies, you're free to leave the country and live elsewhere." In other words, America: love it or leave it. If that's your position, then you can maintain your claim that the restaurant, the employer, and the state all give you nothing but an exit option. But the state's exit option forces you to change every aspect of your life (leave you friends, leave your family, leave your home, leave your property, leave your job...). One of the benefits of have a private, decentralized economy is precisely that it allows you to exit some arrangements without exiting others.

Also, note that the "love or leave it" position will defend any government policy you want, including the most egregious violations of civil rights. Don't like being unable to speak your mind? Don't like having your home searched without even a warrant? Then leave!

I agree with you that there are degrees of coercion, and I'd certainly rather have less coercive policies than more coercive ones. Insofar as S&T's gov't policies are presented as alternatives to "hard paternalist" policies with fewer exit options, I would support them. But I think S&T have much more in mind. Their "soft paternalism" is not the alternative to "hard paternalism," but the precursor to it -- the thin end of the wedge.